UK manufacturing is coming home

With costs rising and the labour pool shrinking in China's east coast
production heartland, companies are thinking about bringing manufacturing
home. But do UK workers want the jobs?

Emma Bridgewater, who has been manufacturing pottery and textiles in Stoke for 27 years, says she's got the proof that a "quixotic" faith in UK manufacturing needn't end in disaster.Photo: Gabriel Szabo

Tony Caldeira's warehouse supervisor, Xiao Qi, wants a pay rise. While trading is tough and costs are rising, Caldeira, boss of a Merseyside cushion company of the same name, offers a 30pc increase. It sounds like a huge hike compared with the measly 1.4pc average annual raise that UK workers endured in 2011.

But this is China, where a combination of inflation and manufacturing migration is resulting in spiralling wage demands from the workers who remain in the country's east-coast production heartland. Xiao is not impressed with the offer – she says it's her way, in the form of a 50pc pay rise, or the highway.

Caldeira appears almost powerless, a remarkable reversal of fortunes from when he first arrived in China in 2003.

"Millions of workers coming to the coast meant there was always a plentiful supply of labour. Now Chinese manufacturers are moving inland because of the prices in the booming coastal cities. The workers can stay closer to home, so what's left is more jobs than workers. Eighteen months ago, we really started to struggle to get staff."

Chinese jobs fairs now resemble a pre-Big Bang trading floor, he says. The salaries, shown on whiteboards, move by the minute, mostly upwards, as workers' demands push up prices. "It's wage inflation in front of your eyes." Prospective staff can even expect to be shown workplaces to see if they meet their standards.

These revealing scenes are played out in The Town Taking on China, a BBC Two documentary that follows the £20m-turnover company's attempts to deal with the problem by choosing Xiao's latter option – the highway. Caldeira wants to bring manufacturing home to its Kirkby factory.

With 2.65m people unemployed in the UK and the economy still vulnerable to a reliance on financial services, "repatriation" of manufacturing sounds an attractive concept. But can UK workers compete with their Chinese counterparts on cost, skills and commitment?

The early signs were not encouraging for Caldeira, who began his hunt for staff at the jobcentre. Ponderous sewers prove a drag on orders, warehouse workers call in sick. Three weeks in to his plan, four of the 17 staff he's hired have left – for a better-paid job in a call centre in at least one instance. "We really struggled with machinists – it's a skilled job to do that accurately and quickly all day," Caldeira says. "In the past we've always been able to get experienced machinists from other factories closing. Now it's a new generation and they don't have the skills."

The jobs Caldeira is creating don't pay much more than minimum wage, so the focus is inevitably on youngsters or the unemployed. This has provided an illuminating "snapshot of Britain", he says. "Half of the young people we've taken on are just glad to have some work and build a career. The other half don't want to know."

Caldeira is undeterred, however, and believes investing in training willing young people will eventually pay off.

Emma Bridgewater, who has been manufacturing pottery and textiles in Stoke for 27 years, says she's got the proof that a "quixotic" faith in UK manufacturing needn't end in disaster. When her manufacturing partner went bust in the early 1990s, she resisted calls to follow the Eastern tide and bought the assets.

"People told me I was cuckoo. At times it's been ghastly, but also worthwhile," she says. Now she's hoping more companies that moved offshore will start to follow Caldeira home. "I'm constantly astonished more people aren't doing what Tony is."

Having built a manufacturing operation while counterparts were either dying or leaving home, she insists the right workers can be found – if bosses are willing to be patient and not believe the "myth" that it's too hard to hire and fire staff in the UK.

"The staff are often not madly enthusiastic at first. There's a scepticism which is often born of years of very bad treatment. But people do want to work.

"We hire and fire a bit – if we have to we can adjust our capacity quite sharply. Get a good lawyer and you can get rid of people if you have to."

Bridgewater admits a long-term view is required – she insists her eponymous £14m turnover company is not for sale, partly because a buyer might sell the factory – "a quick, easy bit of asset stripping".

She is also sympathetic to the frustration shown by Caldeira's right-hand man Malcolm Smith in the documentary – which concludes on Tuesday – when new recruits slow down production. "You can't afford a long unproductive training period, it's a big problem – tax breaks to encourage training would help. But there are plenty of opportunities and companies are mystifyingly bad at getting on with it," she says.

Caldeira believes UK manufacturers who are still standing could be approaching a watershed moment. "With labour costs, duty, shipping costs and fuel prices on one side and shorter lead times, speaking the same language, smaller order quantities [on the other], when the call becomes marginal, my instinct is to bring it home," he says.

"If you've survived the first wave of globalisation, you'll be more competitive now. It's not a one-way bet anymore. I won't be the only one doing this. The tide has turned."

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